The European debt crisis has been casting a shadow on the U.S. economic recovery for most of the past twelve months.   However, in spite of the hysteria in the popular press, the International Monetary Fund’s recent update to its World Economic Outlook left its prediction of 1.8% annual GDP growth for the US untouched while lowering their estimates for the Eurozone and economies with significant trade and financial ties to Europe.  One rationale for the IMF’s decision to leave the US estimate where it was in their September 2011 report was that the US is now more insulated from “financial and trade spillovers” from the euro area economy.  In this article, we use various infographics to show that in spite of the media fixation with Greece’s debt problems stalling the U.S. economy, banks in the United States have little  exposure in European countries other than the United Kingdom, France and Germany as the map below shows.

European Debt US Bank Risk

In those countries, the collective exposure for U.S. banks is about $1.5 trillion while the U.S. GDP is $15.3 trillion.  To put that another way, if things in Europe got so bad economically that Germany, France and the United Kingdom all defaulted on their debts to U.S. banks, the cumulative loss in GDP would be about 10% whereas the cumulative loss from the Great Recession was about 20 percent.  The chart below shows the relative risk for U.S. banks across all countries in Europe.

US Bank Exposure on European Debt